I am using Turbo Tax Business to prepare a 2023 1041 tax return for a complex trust. The trust will distribute all remaining assets to trust beneficiaries in March 2024 and will have no income in 2024. Should the 2023 1041 tax return be marked as the final return for the trust? The trust had income in 2023 and will use capital loss carry-forwards to reduce the trust’s taxable income by $3,000. After those capital loss carry-forwards are applied on the 2023 1041 return, the trust will still have $2,634 in unused capital loss carry-forwards. Can I allocate those remaining capital loss carry-forwards among the trust beneficiaries in the Trust’s 2023 Form 1041 and provide each beneficiary with a K-1 showing the loss carry-forward allocated to the beneficiary? If yes, can a beneficiary utilize the capital loss carry forward to reduce the beneficiary’s 2023 taxable income or does the beneficiary have to wait until 2024 to utilize the carry-forward since the trust will have already utilized $3,000 to reduce the Trust’s 2023 taxable income?
